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Toyota heads to Texas to join other manufacturers

Toyota will consolidate its North American operations in a move to Plano, TX, where the automaker will establish a new headquarters. Having just arrived in Northern Kentucky on the day of the announcement, the small city of Erlanger, KY, which is home to the company's TEMA (Toyota Motor Engineering & Manufacturing North America Inc.), was in a state of shock.

Local news outlets reported that the automotive company didn't say a word to the economic development groups in the area or hinted they'd like to negotiate a better deal. About 1,000 employees will be affected by the move.

Other locations that will be consolidated in the new Texas headquarters facility include Toyota Motor Sales, U.S.A., Inc. (TMS) in Torrance, CA that will affect about 2,000 employees; and certain employees at Toyota Motor North America (TMA) in New York, NY. Construction of the new headquarters is expected to be completed in 2016 or early 2017.

However, at the same time Toyota will expand the Toyota Technical Center (TTC) in Michigan to accommodate the relocation of approximately 250 direct procurement personnel from Erlanger, KY, to its campus in York Township near Ann Arbor. This expansion is part of an increased investment in engineering capabilities and will accommodate future growth in product development.

In addition, about 300 production engineering positions based in Erlanger will be relocated to a new facility to be built at Toyota Motor Manufacturing Kentucky (TMMK) in Georgetown, KY, while approximately 1,000 TEMA administrative positions will transfer to Plano. The company's 10 manufacturing plants in the U.S. will not be impacted by these changes, according to a company announcement.

Georgetown is the site of one of Toyota's premier manufacturing plants that will continue to build the company's premier brands. And even after the reshuffling and the move, Kentucky will have 8,200 Toyota employees.

Reports note that Texas is giving Toyota $40 million in tax breaks -- $10,000 for each one of the 4,000 jobs that the company is bringing to the Lone Star State. Not such a bad deal at a time when U.S. corporations continue to groan under the weight of one of the highest corporate tax rate in the world.

Too bad for the employees that will either have to move to stay with the company or for those that will lose their jobs altogether, and it's sort of a shame that Erlanger is losing TEMA. But it's tough to feel sorry for California or New York - both states have extremely high tax rates and heavy regulatory burdens. Especially California, where that state just hasn't seemed to learn that when you punish companies enough they understand the welcome mat has been rolled up.

New York's latest advertising blitz - at least in Arizona - is about an Arizona-based company that has chosen New York for a new plant, where they can get a 10-year tax break. I'm not sure that California even cares that Texas Governor Rick Perry parades through the Golden State, promoting the benefits of Texas as a place to live and work. Texas may soon have to adopt the California state motto - after all, they're the ones shouting "Eureka!" now.  

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